State's corporate incentive deals lack transparency

Kansas one of five states that posts no information on subsidy deals online

Pat George is secretary of the Department of Commerce, which oversees most of the state's corporate incentive programs. Kansas is one of five states that doesn't post online any information about what companies are receiving which incentives.

CORPORATE CASH

This article is one in a series examining Kansas’ economic incentives.

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Commerce Secretary Pat George says negative attention brought to his department’s use of corporate incentives by a recent audit misses the big picture.

Focusing on the shortcomings of the various programs the department uses to recruit and retain companies, George says, ignores the overall jobs boon the programs have brought the state.

But George’s department makes it more difficult for Kansans to see that big picture by shrouding it in behind open records procedures and accompanying fees, rather than making it available on the Internet like other states.

“Kansas is not great about putting its subsidy data online, at the state level at least,” Phillip Mattera, research director of Good Jobs First in Washington, D.C., said in a phone interview.

Kansas is one of five states, along with Arkansas, Delaware, Idaho and Mississippi, that doesn’t put any corporate subsidy recipient data on the web, Mattera said.

He knows this because he has spent the last few years compiling a massive database of subsidy recipients in each state for Good Jobs First, an organization that bills itself as “the nation’s leading resource for grass-roots groups and public officials seeking to make economic development subsidies more accountable and effective.”

“We have long promoted better disclosure of economic development incentive awards,” Mattera said. “More and more states have been putting more information online. The problem is it was often hard to find that information and it was difficult to do searches across sources and across states.”

Then there were states like Kansas, where none of the information was available online and Mattera was forced to file formal requests under the Kansas Open Records Act.

Through those programs, the department doled out a little more than $30 million to 769 companies from 2006 to 2012, in exchange for the promise of 42,174 jobs or “training slots.”

Most of those companies received less than $100,000. But there were a few outliers, including Spirit Aerosystems Inc., which got $4.5 million in grants and low-cost loans from the Kansas Economic Opportunity Initiatives Fund in 2009.

Some companies, like Fishnet Security and Cosentino’s, also received incentives through other programs for moving a few miles across the Missouri-Kansas border.

The database is only a snapshot within the larger collage of Kansas subsidy programs. Mattera didn’t obtain any data on higher-dollar subsidy programs, including the relatively new Promoting Employment Across Kansas program that was a subject of the recent audit.

“Tried to get that,” Mattera said. “Haven’t been able to.”

When asked about posting information online rather than requiring a formal open records request, George said he “hadn’t really thought about it.”

He also said he wasn’t sure there would be much public demand for such information.

Mattera said the data he is compiling is “meant to serve a lot of different audiences.”

“It’s for public policy researchers, journalists, public officials, even people in the business world,” Mattera said.

Randy Brown, executive director of the Kansas Sunshine Coalition for Open Government, said that government agencies can make their employees’ lives easier by putting data online because it reduces the need to receive and process open records requests.

“They can save themselves time and trouble, and they can build trust in the eyes of the public,” Brown said.

Beyond that, Brown said making government data easily accessible is simply a good principle.

“Transparency, it just builds trust, and I don’t understand what government officials are afraid of in not putting this stuff out there,” Brown said. “Secondly, it’s obstructing what was going to be the salvation of government transparency: the Internet.”

Gary Brinker, the director of the Docking Institute of Public Affairs at Fort Hays State University, said such data should be made available if possible.

“I believe in transparent government,” Brinker said. “So I think unless it’s needed for national security, the public ought to be able to access any information about the government they need to know.”

David Sollars, the dean of the Washburn University School of Business, said via email that he could envision such data being useful for students or faculty members doing research on corporate incentives.

“Academic researchers always like free and easy data,” Sollars said.

But Sollars added that “data collection and dissemination does have costs,” and said he could see that being a factor in the commerce department not putting its subsidy data online.

“Folks always seem to forget that updating websites is not cost-less,” Sollars said.

George said that cost currently plays a role in vetting what information the department can release, which is why most requests under the Kansas Open Records Act come with a fee attached, sometimes for hundreds of dollars.

The state's KORA law gives agencies broad authority to charge whatever they deem necessary for “staff time” to fulfill such requests.

“It does involve time and so what we ask for is to be reimbursed,” George said. “The time is because some things are not part of the public record and if we need to redact something I need to have people that are attorneys go through it.”

Commerce spokesman Dan Lara said the department is considering offering subsidy information online, after it has been vetted by attorneys.

“We’ve had some preliminary discussions about this, and we’ll continue to look at it,” Lara said. “Certainly transparency is an important issue for government.”

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This is the department that hands out money for nothing. They have literally hundreds of contracts totaling millions of dollars where the State receives only intangible benefits. The contracts sound like they're for legitimate purposes, but I've never seen a single tangible deliverable. Biggest boondoggle in State government.

economic development subsidies...including our tax subsidy to the local Topeka Chamber of Commerce($1Million per year>Source>Their own IRS 990 forms). We want transparency now Hiller, Wolgast, Cook.(JEDO-members).

The audit arm of the Kansas Legislature has charged that the Kansas Department of Commerce has exceeded statutory caps in doling out PEAK incentives — a powerful weapon in the economic development border wars with Missouri.

But Commerce Secretary Pat George challenged the auditors’ interpretation of the cap and rebutted other criticism leveled against the department in a recently released audit.

Enacted by the Legislature in 2009, the Promoting Employment Across Kansas program allows companies moving at least 100 jobs to Kansas to retain 95 percent of their employee withholding taxes for as long as 10 years.

When the program was amended in 2010 to allow expanding Kansas companies to qualify, the Legislature introduced a $6 million cap on the forgone tax revenue granted to those companies. But according to the Legislative Division of Post Audit, the Commerce Department authorized $7.5 million in PEAK incentives for fiscal year 2013, thus exceeding the statutory cap by $1.5 million.

In addition, the department has made commitments that exceed the cap by $22.5 million during the next 10 years, the auditors reported.

Responding to the first charge, George said less than $4 million in withholding taxes actually will be forgone for expanding companies during fiscal year 2013. If all PEAK application approvals resulted in incentives, the $7.5 million figure would be accurate, he added. But several don’t, George said, “so we overbook.”

George said the other cap-related charge was based on a difference in interpretations of the cap.

The Commerce Department interpreted the cap to mean it could grant $6 million worth of new PEAK incentives every year “based on discussions with legislators, including those involved in drafting and introducing the language at issue,” George said.

Auditors have interpreted that language to limit PEAK incentives for expanding Kansas companies to a cumulative total of $6 million. But that interpretation would render the program obsolete within the first couple of years, George said.

States are spending billions of dollars on tax incentives to lure businesses, but policymakers often don't know if the incentives work, according to a report released today.

The Council of State Governments report also said that funding education may be more important in trying to bring businesses to a state.

"Most states make significant investments in business incentives, but we've found most states don't have a good handle on what that investment is buying," said David Adkins, executive director and chief executive officer of CSG, a nonpartisan, nonprofit research group based in Lexington, Ky.

The report tracks on a national level what a state audit released earlier this month said of Kansas' business tax incentives.

That audit said it was difficult to assess the benefits of major economic development programs that are designed to lure businesses to Kansas, because the Kansas Department of Commerce had incomplete or inaccurate data. In addition, the audit said the state had exceeded the statutory cap on tax incentives.

The CSG report found similar problems in other states.

The report said state leaders often aren't familiar with the costs of tax incentives, and that solid evaluation of the programs is lacking. It also said bidding wars for businesses between states can have a negative impact.

"Far too often, states are competing for a business whose relocation decision is not significantly impacted by the business incentives offered," said Adkins, a former Kansas state legislator. "Investments in education and cultural resources may actually do more to influence the decisions of CEOs."

a layout so that the people of Kansas can understand how these giveaways are really costing them. The hidden cast of Wal-Mart. to a community. The report could show all the hidden cost that come with that great low paying jobs that wal-marts creates. Then compare that cost to the hidden cost of local stores, and the true number of jobs that all these smaller stores create. Americans love a lie lowest prices always(when hidden cost are added wal-mart is very expensive), We promote our employee's, give them great benefits. Wal-Mart climes all these things, but when you talk to the employee's you hear the truth and it is not good.